Unsophisticated Sentencing

UNSOPHISTICATED SENTENCING
MIRIAM H. B AER
I. INTRODUCTION .................................................................................... 61
II. T HE 2001 FRAUD GUIDELINE AND THE SOPHISTICATED MEANS
ENHANCEMENT ................................................................................ 63
III. T HE ENHANCEMENTS GROWING POPULARITY: 200513 ........... 67
IV. EVALUATING THE ENHANCEMENTS POPULARITY ....................... 72
A. The Justifications for Punishing Sophistication........................... 73
1. Sophistication as a Proxy for Probability of Detection ......... 74
2. Sophistication as Enhanced Moral Culpability ..................... 78
B. Three Possible Reasons for the Increase ..................................... 80
1. Fraud Offenders Have Become More Sophisticated.............. 81
2. Prosecutors Have Charged More Sophisticated Fraud
Offenses ............................................................................... 82
3. Sentencing Creep: Getting Used to the Sophisticated
Means Enhancement ........................................................... 84
V. SOLUTIONS TO A POSSIBLE PROBLEM ............................................. 85
VI. CONCLUSION ................................................................................... 89
I. INTRODUCTION
Some articles focus on big issues, such as the proper purposes of
sentencing, the debate between determinate and indeterminate sentencing,
or the optimal allocation of authority between prosecutors and judges. This
piece, written for the Wayne Law Review Symposium on white collar
sentencing, tackles a concededly narrower topic: the sophisticated
means enhancement for fraud offenses under Section 2B1.1(b)(10)(C) of
the United States Sentencing Guidelines (USSG).1 Over the past decade,
the rate at which courts impose this enhancement in federal fraud cases
has more than tripled, from approximately 2.9% of all fraud cases in 2005
to over 11% in 2013.2
Professor of Law, Brooklyn Law School.
The author thanks Professor Peter Henning and the staff of the Wayne Law Review
for organizing this Symposium.
1. U.S. SENTENCING GUIDELINES MANUAL 2B1.1(b)(10) (2014). The Sentencing
Commission recently voted to amend parts of this Guideline. See infra Part IV and notes
115116.
2. See infra Table 1. This includes not only the application of the enhancement under
Section 2B1.1, but also under the fraud guidelines predecessor, Section 2F1.1. The
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Although the enhancements effect on sentences is modest, amounting

to an increase of 612 months imprisonment for most defendants, its
increasing prevalence ought to inspire interest among those tasked with
mediating limited enforcement budgets and prison space.3 Moreover, this
case study is particularly timely in light of the Sentencing Commissions
recent attempt to reform the primary guideline under which economic
offenders are sentenced.4 Indeed, the enhancement growth demonstrates
the ways in which various sorting measures can gradually lose their ability
to distinguish the worst offenders from the merely bad.
This Essay begins by briefly discussing the two-point enhancement
for frauds that involve[] sophisticated means.5 It then demonstrates,
using the Sentencing Commissions own data, the steady increase in the
number of fraud sentences that include the enhancement.6 After
considering several justifications for the enhancement,7 the Essay offers
three possible explanations for this increase.8 They include: (a) the
criminal population has become more sophisticated since the enhancement
enactment;9 (b) federal prosecutors have charged more sophisticated fraud
Sentencing Commissions data did not begin breaking out data for this particular
enhancement until 2005.
3. The United States Sentencing Commission (Commission or Sentencing
Commission) has highlighted its intention to consider the issue of reducing costs of
incarceration and overcapacity of prisons, to the extent it is relevant to any identified
priority. Proposed Priorities for Amendment Cycle, 79 Fed. Reg. 31409-01 (proposed
June 2, 2014).
4. The Commission has been engaged in a multi-year study of Section 2B1.1. See
Sentencing Guidelines for United States Courts, 78 Fed. Reg. 51820 (Aug. 21, 2013); see
also Final Priorities for Amendment Cycle, 79 Fed. Reg. 49378 (Aug. 20, 2014). As part
of its study, the Commission conducted a symposium in New York City on September 18
19, 2013, to discuss possible changes to Section 2B1.1. Transcripts and other materials
related to the Symposium are available. See United States Sentencing Commission
Symposium
on
Economic
Crime,
U.S.
SENTENCING
COMMISSION,
http://www.ussc.gov/research-and-publications/research-projects-and-surveys/economiccrimes/united-states-sentencing-commissionsymposium-economic-crime (last visited May
25, 2015).
5. U.S. SENTENCING GUIDELINES MANUAL 2B1.1(b)(10) (2014). The manual
provides in pertinent part: If (A) the defendant relocated, or participated in relocating, a
fraudulent scheme to another jurisdiction to evade law enforcement or regulatory officials;
(B) a substantial part of a fraudulent scheme was committed from outside the United States;
or (C) the offense otherwise involved sophisticated means, increase by 2 levels. Id. The
Sentencing Commission has proposed an amendment that would narrow the
enhancements application to the defendant whose specific conduct involves sophisticated
means. For discussion on this, see infra Part V and notes 115116.
6. See infra Part III.
7. See infra Part IV.A.
8. See infra Part IV.B.
9. See infra Part IV.B.1.
2015]
63
crimes as a percentage of their overall docket;10 and (c) courts, probation

officers and prosecutors all have gradually widened their definition of
what counts as sophisticated, thereby creating a type of sentencing creep,11
wherein the enhancement no longer performs the guidelines intended
function of distinguishing more serious offenses from lesser ones.12
The final section of this Essay addresses the policy implications of the
foregoing discussion.13 Enhancements such as those found in Section
2B1.1 are intended to guide federal judges in separating out merely bad
behavior from much worse behavior.14 If the Commission meant the
sophisticated means enhancement to cull the most dangerous or most
morally culpable fraud offenders from the rest of the herd, it may need to
find different language to say so. Left intact, the enhancement is likely to
become nearly as ubiquitousand criticizedas its predecessor, the
more than minimal planning enhancement.
II. T HE 2001 FRAUD GUIDELINE REVISION AND THE SOPHISTICATED
MEANS ENHANCEMENT
In 2001, after five years of receiving substantial input from numerous
federal criminal justice constituencies, the Sentencing Commission
overhauled the economic crime guidelines that pertained to fraud and theft
offenses.15 Sections 2F1.1 and 2B1.1, which previously had separately

11. Mission creep is a social science term describing the ways in which regulators
gradually stray beyond their agencys prescribed mission. The term sentencing creep
applies the general concept of mission creep to the sentencing context. For one authors
recent critique of sentence creep at the state level, see Anne Yantus, Sentence Creep:
Increasing Penalties in Michigan and the Need for Sentencing Reform, 47 U. MICH. J.L.
REFORM 645 (2014).
13. See infra Part V.
14. The Guidelines are advisory, not mandatory. United States v. Booker, 543 U.S.
220, 245 (2005). Trial courts must impose a sentence in accordance with the general
purposes of punishment laid out in 18 U.S.C.A. 3553 (a) (West 2014). Although
sentences may still be reviewed on appeal for reasonableness, a sentence that applies the
Guidelines and sentences the defendant within its recommended sentencing range is
presumptively reasonable on appeal. Rita v. United States, 551 U.S. 338, 351 (2007).
15. For an excellent overview of the dynamics underlying the 2001 Economic Crime
Package and the resulting Guidelines that were enacted, as well as the dynamics that led to
further changes following passage of the Sarbanes-Oxley Act, see Frank O. Bowman, III,
The 2001 Federal Economic Crime Sentencing Reforms: An Analysis and Legislative
History, 35 IND. L. REV. 5, 3847 (2001) [hereinafter Bowman, The 2001 Federal
Economic Crime Sentencing Reforms] and Frank O. Bowman, III, Pour Encourager Les
Autres? The Curious History and Distressing Implications of the Criminal Provisions of
the Sarbanes-Oxley Act and the Sentencing Guidelines Amendments that Followed, 1 OHIO
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addressed fraud and theft offenses respectively, were consolidated into a

single guideline, Section 2B1.1.16 The new Section 2B1.1 featured a
revised loss table that imposed higher penalties on offenses that involved
high loss amounts and lower penalties for offenses that involved very low
loss amounts.17
Notably, the Commission deleted from the consolidated guideline an
enhancement that had previously applied to offenses involving more than
minimal planning (MMP), in part because the enhancement had become
so common.18 As a result, the MMP enhancement no longer divided the
really sophisticated schemers from the mass of ordinary thieves.19 The
revised and consolidated guideline effectively incorporated MMP into the
revised fraud loss table; its elimination therefore was neither intended nor
perceived as a reduction in sentence for most fraud offenders.20
At the same time the Commission did away with MMP, it highlighted
the sophisticated means enhancement, which had been added to the
fraud guideline back in 1998, pursuant to Congresss directive in the
Telemarketing Fraud Prevention Act.21 The enhancement, which mirrored
a similar enhancement already contained in the tax fraud guideline,
Section 2T1.1, increased an offenders offense level by two whenever it
appeared that the offense involved sophisticated means in either the
execution or concealment of the offense.22 The enhancement also set a
ST. CRIM. L.J. 373, 38791 (2004) [hereinafter Bowman, Sarbanes-Oxley Act and the
Sentencing Guidelines Amendments].
16. Bowman, Sarbanes-Oxley Act and the Sentencing Guidelines Amendments, supra
note 15, at 388.
17. Id. at 389.
18. Id. at 407; see also John Steer, The Sentencing Commissions Implementation of
Sarbanes-Oxley, 15 FED. SENTG REP. 263, 264 (2003) (explaining that MMP had become
routinely applicable in nearly all fraud offenses and produced an inordinate amount of
litigation in both the sentencing and appellate courts).
19. Frank O. Bowman, III, Coping with Loss: A Re-Examination of Sentencing
Federal Economic Crimes Under the Guidelines, 51 VAND. L. REV. 461, 499 (1998)
[hereinafter Bowman, Coping with Loss].
20. United States v. Forchette, 220 F. Supp. 2d 914, 917-18 (E.D. Wis. 2002) (citing
U.S. S ENTENCING GUIDELINES M ANUAL app. C (supp. 2001) (amendment 617)) ([T]he
enhancement has not really been abolished. Rather, in recognition of the fact that it was
applied in more than eighty percent of fraud cases, the Commission simply incorporated it
into the 2B1.1 loss table, obviating the need for judicial fact-finding and avoiding the
potential overlap with the use of sophisticated means enhancement.).
21. See U.S. SENTENCING GUIDELINES MANUAL app. C (Supp. 1998), available at
http://www.ussc.gov/sites/default/files/pdf/guidelinesmanual/1998/manual/APPCSUPP.pdf.
22. See U.S. SENTENCING GUIDELINES MANUAL 2T1.1(b)(2) (2014). The Commission
first suggested an enhancement for sophisticated concealment, (see Amendment 576),
but later broadened the enhancements language to sophisticated means to adhere to
Congress directive in the Telemarketing Fraud Prevention Act of 1998. U.S. SENTENCING
2015]
65
floor of twelve offense levels for any offense (even a very low-loss
offense) meeting the definition of sophisticated.23
A close reading of the enhancement suggests that the Commission
originally intended it to function as a catch-all, the third of three
enhancements aimed at complex, or difficult to detect, conduct.
Specifically, the Guideline provides: If (A) the defendant relocated, or
participated in relocating, a fraudulent scheme to another jurisdiction to
evade law enforcement or regulatory officials; (B) a substantial part of a
fraudulent scheme was committed from outside the United States; or (C)
the offense otherwise involved sophisticated means . . . .24The placement
of the sophisticated means enhancement at the end of this list is notable.
The first two enhancements describe a narrow set of offenses: offenses in
which the offender purposely relocated the scheme to evade law
enforcement, and extraterritorial offenses, whose presence in foreign
countries uniformly posed difficulties for enforcement authorities and
therefore, by definition involved a particularly high level of . . .
complexity.25
But what of those cases that were neither extraterritorial, nor
purposely relocated in order to evade authorities? What is a fraud offense
that otherwise involve[s] sophisticated means?26 A jurist might conclude
that whatever falls within this group, it must be an offense at least as
complex, with an offender as difficult to apprehend, as either the
extraterritorial or multijurisdictional offenses that qualify for similar
enhancements.27 But the Guidelines own Application Note following
Section 2B1.1 appears to reject this familiar interpretive approach.28
Although the Note initially states that the enhancement applies to
GUIDELINES MANUAL 2T1.1(b)(2) app. C (supp. 1998), available at

http://www.ussc.gov/sites/default/files/pdf/guidelinesmanual/1998/manual/APPCSUPP.pdf.
23. See id. 2T1.1(b).
24. Id. 2B1.1(10) (2014) (emphasis added).
25. See U.S. SENTENCING GUIDELINES MANUAL 2B1.1 cmt. background (2012).
26. See U.S. SENTENCING GUIDELINES MANUAL 2B1.1(10) (2014).
27. Such an approach would reflect the interpretive canon known as ejusdem generis.
[W]hen a statute sets out a series of specific items ending with a general term, that general
term is confined to covering subjects comparable to the specifics it follows. Hall St.
Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 586 (2008); see also Victorias Secret Direct,
LLC v. United States, 769 F.3d 1102, 1107 (Fed. Cir. 2014) (quoting Avenues Leather,
Inc. v. United States, 178 F.3d 1241, 1244 (Fed. Cir. 1999)) (general phrase at end of list
ought to reflect same essential characteristics or purposes that unite the listed examples
preceding the general term or phrase.).
28. See U.S. SENTENCING GUIDELINES MANUAL 2B1.1 cmt. n.9(B).
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especially complex or especially intricate offense conduct,29 it goes on

to provide examples that promote a far broader application of the term.
For example, in a telemarketing scheme, locating the main office
of the scheme in one jurisdiction but locating soliciting operations in
another jurisdiction ordinarily indicates sophisticated means. Conduct
such as hiding assets or transactions, or both, through the use of
fictitious entities, corporate shells, or offshore financial accounts also
ordinarily indicates sophisticated means.30
Now, perhaps locating the main office of a fraudulent scheme in one
state and carrying out the rest in another appeared particularly complicated
back in 1998, when telemarketing schemes were salient and on both the
legislatures and Commissions minds. Neither cell phones nor portable
computers were as accessible or powerful as they are today, and perhaps
the movement of assets through more than one bank account evinced
particular sophistication and cunning back in the day. The use of multiple
shells or fictitious entities might well have confused even veteran
investigators and thereby delayed detection of certain frauds.
As the Supreme Court itself recently recognized, however,
technologyparticularly technology relating to the ways in which we use
computers, the Internet, and telephoneshas dramatically transformed the
ways in which we conduct our personal and commercial business.31 As a
result, mere amateurs can easily undertake the conduct that society
previously deemed so sophisticated.
Today, setting up a virtual office in multiple states would require no
more than a few clicks on the Internet;32 opening one or several bank
accounts online would be, in the words of one financial institution fast,
easy, and secure;33 and incorporating one or more entities as a corporation
29. Id.
30. Id.
31. Riley v. California, 134 S.Ct. 2473, 2490 (2014) (Prior to the digital age, people
did not typically carry a cache of sensitive personal information with them as they went
about their day. Now it is the person who is not carrying a cell phone, with all that it
contains, who is the exception.).
32. See United States v. Brown, No. CIV. WMN-14-224, 2015 WL 1622034, at *1 (D.
Md. Apr. 8, 2015) (describing a scheme in which the defendant falsely held out that his
companies had offices in several cities and abroad, when in fact, he was using virtual
offices, telephone answering services, and mail forwarding services to mimic multiple
offices).
33. See,
e.g.,
Open
a
SunTrust
Account,
SUNTRUST,
https://www.suntrust.com/OpenAccount (last visited May 25, 2015); see also CITI.COM
https://online.citibank.com/US/JRS/pands/detail.do?ID=AOProductSelection (last visited
May 25, 2015) (advising customers to apply now [w]ithout moving a muscle); FAQs:
2015]
67
or limited liability company would not only be easy, but also fairly
inexpensive, as numerous incorporation businesses now market their
assistance over the web.34 If sophistication is an absolute concept, linked
to the usage of or interaction with multiple locations, accounts and
corporate entities, then it is fair to say that a substantial number of those
defendants who have transgressed one of the many federal fraud statutes
have in fact used sophisticated means. Indeed, the very concept of
geographical boundaries embedded in the enhancement no longer makes
sense. Perhaps some schemes really are located in New York or New
Jersey or some foreign country; many others, however, areand will
increasingly continue to belocated primarily in some amorphous, virtual
computing cloud.35
To put it mildly, during the past decade, the enhancements
Application Note has become obsolete. In the meantime, the
enhancements prevalence has steadily increased, as discussed in Part III
below.
III. T HE ENHANCEMENTS GROWING POPULARITY: 200513
Over the past decade, the sophisticated means enhancement has
become more prevalent. Consider Table 1 below, which aggregates the
data found on the Commissions website.36 Between 2005 and 2013, over
70,000 individuals were prosecuted and sentenced for fraud-related
Applying
for
Bank
Accounts,
BANK
OF
AMERICA,
https://www.bankofamerica.com/deposits/manage/faq-applying-for-accounts.go
(last
visited May 25, 2015) (advising that customers may apply online for a checking, savings,
CD or IRA account).
34. See, e.g., COMPANY CORP., https://www.incorporate.com (last visited May 25,
2015) (incorporation site advertising fast, simple incorporations); Michael Simkovic &
Benjamin S. Kaminetzky, Leveraged Buyout Bankruptcies, The Problem of Hindsight Bias,
and the Credit Default Swap Solution, 2011 COLUM. BUS. L. REV. 118, 123 n.7 (2011)
(citing rise of online and do-it-yourself incorporation sites that provide services for less
than $200).
35. Riley, 134 S. Ct. at 2491 (Cloud computing is the capacity of Internet-connected
devices to display data stored on remote servers rather than on the device itself.).
36. The information discussed in this Section was extracted from the Guideline
Application Frequencies tab, found on the Sentencing Commissions website. Guideline
Application Frequencies, U.S. SENTENCING COMMN, http://www.ussc.gov/research-andpublications/federal-sentencing-statistics/guideline-application-frequencies (last visited
May 25, 2015). The Commission provides a frequency analysis for each fiscal year from
2013 through 2002. The Commission began reporting the sophisticated means
enhancement contained in Sections 2B1.1(b)(10)(C) and 2F1.1(b)(6)(C) separately from
other enhancements (relocating the crime to a different jurisdiction and committing a
substantial portion of the scheme from outside United States) in 2005. Id.
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offenses.37 Most of those individuals were sentenced under Section 2B1.1;

some, whose crimes occurred prior to the overhaul of the economic
Guidelines, were sentenced under Section 2F1.1, which contained its own
identical sophisticated means enhancement.38
Over a nine-year period, the percentage of fraud defendants who have
received a sophisticated means enhancement under either Sections 2B1.1
or 2F1.1 has more than tripled:
37. See generally Guideline Application Frequencies, U.S. SENTENCING COMMN,

http://www.ussc.gov/research-and-publications/federal-sentencing-statistics/guidelineapplication-frequencies (last visited May 25, 2015).
38. Although a court ordinarily applies the Guidelines Manual in effect as of the date
of sentencing, the court should apply an earlier manual if application of the new manual
results in an ex post facto problem. See U.S. SENTENCING GUIDELINES MANUAL
1B1.11(b)(1) (2012). Accordingly, even after the enactment of Section 2B1.1 in 2001, a
number of defendants continued to seek sentencing under the previous Guidelines
Manuals, which sentenced fraud under Section 2F1.1. Each Guideline contains an identical
enhancement for frauds involving sophisticated means. See generally Guideline
May 25, 2015).
2015]
69
Table 1: Sophisticated Means from 2005-13

Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
Fraud
Offenders
Sentenced
under
2B1.1 and
2F1.139
8060
8089
7777
8370
8058
8427
8561
8748
8416
74506
Offenders
Receiving
Enhancement
under 2B1.1
or 2F1.1
232
302
387
420
507
601
813
837
982
5081
Percentage
of Offenders
Receiving
Enhancement
under Section
2B1.1
2.9%
3.6%
4.3%
4.7%
6.2%
7.1%
9.4%
9.6%
11.7%
------
Percentage
of Offenders
Receiving
Enhancement
under 2B1.1 or
2F1.140
2.9%
3.7%
5.0%
5.0%
6.3%
7.1%
9.5%
9.6%
11.7%
--------
Back in 2005, a tiny fraction of fraud offenders received the two-point

enhancement under either 2B1.1 or 2F1.1.41 Today, over 10% do,42 and
that number appears poised to grow in light of the manner in which courts
routinely interpret the enhancement.
Over the years, a number of federal courts have held that the
sophisticated means enhancement is warranted for conduct that is
repetitive and coordinated,43 that extends over a certain period of
39. These figures were calculated by adding the total number of defendants sentenced
under Sections 2B1.1 and 2F1.1 as reported in the Sentencing Commissions Use of
Guidelines and Specific Offense Characteristics: Fiscal Year, for each year from 2005
2013. Each of these reports can be found at the Guideline Frequencies tab on the
Commissions website for each of these years, the fiscal year report was used. Guideline
Oct. 10, 2014).
40. These figures were calculated by adding the total number of defendants
sentenced under both 2B1.1 and 2F1.1 for the respective year to obtain a denominator, and
then adding the total number of defendants receiving sophisticated means enhancements
under either Guideline enhancement to obtain a numerator. Id.
41. See Guideline Application Frequencies, supra note 37.
42. Id.
43. United States v. Bane, 720 F.3d 818, 82627 (11th Cir. 2013) (relaying how
defendant coordinated complex series of acts to accomplish health care fraud scheme).
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time,44 that includes the use of pseudonyms, forgeries, or fake invoices,45

or that employs several bank accounts (often in someone elses name) to
carry out the offense.46 Sophisticated schemes need not be brilliant or
even intelligent, so long as they exhibit greater complexity than socalled ordinary frauds.47 As the Eighth Circuit recently observed
(apparently without irony): Sophisticated means need not be highly
sophisticated.48 To prove that the enhancement truly has come full circle,
one court has helpfully explained that the enhancements application is
proper when the conduct shows a greater level of planning or concealment
than a typical fraud of its kind.49 Thus, the very enhancement that was
intended to replace more than minimal planning now appears to apply
to anything requiring more than usual planning.
Some of the enhancements growth may be attributable to the
interpretive approach that many courts adopt. Because courts often
evaluate the offenders scheme viewed as a whole, for sophistication,50
prosecutors have every reason to cite every aspect of the fraud, including
even relatively simplistic behavior. By the same token, otherwise ordinary
schemes can attain sophistication primarily because of their duration. Over
time, the factors cited by the court upholding the enhancement in case A
create fodder for the enhancements application in case B, which
features a slightly different panoply of actions that holistically
demonstrates the defendants sophistication.
44. United States v. Bistrup, 449 F.3d 873, 883 (8th Cir. 2006).
45. United States v. Crosgrove, 637 F.3d 646, 667 (6th Cir. 2011) (enhancement
appropriate for defendant who used pseudonym and issued fraudulent insurance
certificates); United States v. Miell, 744 F. Supp. 2d 904, 941 (N.D. Iowa 2010) (opining
that the use of forged signatures and falsified or altered documents to support the fraud is
sufficient, standing alone to support a sophisticated means enhancement).
46. See United States v. Horob, 735 F.3d 866, 872 (9th Cir. 2013) (citing the
defendants use of multiple bank accounts and forged documents, as well as the fact that
the defendant manipulated several people to lie for him); United States v. Clarke, 562
F.3d 1158, 1166 (11th Cir. 2009) (contending that there exists no material difference
between concealing income and transactions through the use of third-party accounts . . .
and using a corporate shell or a fictitious entity to hide assets.).
47. This argument confuses sophisticated for intelligent. United States v. Fife,
471 F.3d 750, 754 (7th Cir. 2006) (rejecting the defendants argument that a dumb
scheme did not qualify for enhancement in tax fraud case).
48. United States v. Norwood, 774 F.3d 476, 480 (8th Cir. 2014).
49. United States v. Fumo, 655 F.3d 288, 315 (3d Cir. 2011) (quoting United States v.
Landwer, 640 F.3d 769, 771 (7th Cir. 2011)) (emphasis added).
50. See, e.g., United States v. Mahmud, 541 F. Appx 630, 636 (6th Cir. 2013) ([E]ven
though none of its component parts was especially intricate standing alone, the scheme as
a whole was complex.); United States v. Jenkins, 578 F.3d 745, 751 (8th Cir. 2009);
United States v. Jackson, 346 F.3d 22, 25 (2d Cir.2003) ( [E]ven if each step in the scheme
was not elaborate, the total scheme was sophisticated in the way all the steps were linked
together . . . .).
2015]
71
Not every court has moved in this direction. The Fourth Circuit, for
example, recently admonished that the enhancement does require more
than just thoughtful or potentially successful planning and overturned a
lower courts application of the enhancement in a bank fraud case. 51
Among other things, the appellate court did not agree that forgeries and
the use of a stolen identity evinced sufficient sophistication.52 But this case
suggests only that the enhancement, much like the MMP enhancement that
preceded it, is likely to become the subject of inconsistent opinions and
substantial litigation. Indeed, an earlier Fourth Circuit opinion, which
affirmed application of the enhancement, cited familiar facts such as the
duration of the defendants scheme and the nature and extent of his lies to
his victims.53 Certainly, there exists no reason for prosecutors not to seek
the enhancement whenever they can. The enhancement is so case-specific
it is doubtful that any one court opinion will curtail its future application.
Oddly enough, the enhancements tax evasion twin has not enjoyed
the same statistical increase in popularity; this may be because courts
already applied it more often in 2005, or because the enhancement in
Section 2T1.1 applies to a much narrower category of criminal conduct.54
Nevertheless, courts appear to interpret the tax-related enhancement as
expansively as they interpret the enhancement under Section 2B1.1.55
To the extent courts are either explicitly or implicitly interpreting
sophistication to mean more than usual planning, they risk transforming
the enhancement into a newer version of the more than minimal
planning adjustment. Had the Commission desired to transform more
than minimal planning into more than usual planning, it easily could
have done so. Instead, the Commission eliminated MMP and effectively
incorporated the concept of planning into the fraud loss tables back in
51. United States v. Adepoju, 756 F.3d 250, 259 (4th Cir. 2014) (deciding that the use
of forged checks and stolen identity to commit bank fraud was an insufficient basis for
application of enhancement in a bank fraud case).
52. Id.
53. United States v. Shmuckler, 533 F. Appx 287, 289-90 (4th Cir. 2013), cert. denied,
134 S. Ct. 963 (2014) ([The defendant] similarly attracted clients with lies, including
falsehoods regarding the success rate of his business, his status as an attorney, and the
extent of [his companys] operations. He also took significant steps to conceal his fraud by
telling clients not to communicate with their lenders.).
54. In 2013, 14.3% of the 628 offenders sentenced under Section 2T1.1 received the
enhancement for sophisticated means under Section 2T1.1(b)(2), whereas in 2005, that
figure was 14.1%. See Guideline Application Frequencies, supra note 37.
55. See, e.g., United States v. Jennings, 711 F.3d 1144, 114748 (9th Cir. 2013)
(deciding that the use of a bank account with a deceptive name to hide income was
sufficient to justify the enhancements application in a tax fraud case).
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2001.56 Moreover, as MMPs critics pointed out years ago, an

enhancement that applies to nearly all cases does not make for a very good
sorting device.57
Of course, it may be that the sophisticated means enhancements
incidence will soon level off or that the fraud offender population has so
changed in recent years that circumstances actually warrant an across the
board, two-level increase. I consider these points more fully in Part IV.
IV. EVALUATING THE ENHANCEMENTS POPULARITY
As discussed in Part III, even a casual observer can discern from a
review of both court cases and Sentencing Commission data the
sophisticated means enhancements growing popularity. Given the manner
in which courts have interpreted the enhancement, there is no reason to
believe this increase will abate.
Although the Guidelines are themselves advisory, they nevertheless
set an anchoring point for sentencing judges,58 even though judges have
been fairly willing to sentence below those anchoring points in fraud
cases.59 Thus, the enhancement imposes costs on defendants, including
those who successfully argue for variances from their recommended
sentencing ranges.
For many defendants, the inclusion of the enhancement translates into
an imprisonment increase of about six months, all else being equal.60 For
extremely low-loss offenses, the inclusion translates into an offense level
floor of twelve and the increased likelihood that the offenders sentence
56. See Bowman, The 2001 Economic Crime Sentencing Reforms, supra note 15, at 30
(explaining that the new guideline builds the [MMPs] two levels into its loss table
beginning with cases in which the loss exceeds $120,000).
57. Bowman, supra note 19, at 499.
58. Peugh v. United States, 133 S.Ct. 2072, 2083 (2013) (The post-Booker federal
sentencing scheme aims to achieve uniformity by ensuring that sentencing decisions are
anchored by the Guidelines and that they remain a meaningful benchmark through the
process of appellate review.); Gall v. United States, 552 U.S. 38, 46 (2007) ([A] district
judge must give serious consideration to the extent of any departure from the Guidelines
and must explain his conclusion that an unusually lenient or an unusually harsh sentence
is appropriate in a particular case with sufficient justifications . . . .).
59. For a discussion on sentencing departures in fraud cases, see Frank O. Bowman,
III, Dead Law Walking: The Surprising Tenacity of the Federal Sentencing Guidelines, 51
HOUS. L. REV. 1227, 125152 (2013) [hereinafter Bowman, Dead Law Walking].
60. Under the Sentencing Guidelines Sentencing Table, a two-level increase for a firsttime offender with an offense level of 15 would result in an additional six months
imprisonment added to his recommended sentencing range. U.S. SENTENCING GUIDELINES
MANUAL
ch.
5,
pt.
A,
Sentencing
Table,
(2013),
available
at
http://www.ussc.gov/guidelines-manual/2013/2013-5asentab.
2015]
73
will include a term of imprisonment.61 For high-loss offenders, as well as

recidivists, the enhancement can result in substantially greater terms of
imprisonment, with increases of twenty or even thirty months.62
Thus, the enhancement, as it grows in popularity, imposes a moderate
additional punishment on numerous criminals who commit fraud offenses.
The normative component of this increase hinges largely on two factors:
(a) the purported reason for punishing sophistication in the first place;
and (b) the explanation for the enhancements rise in popularity over the
past decade. The next two sections consider both of these issues in turn.
A. The Justifications for Punishing Sophistication
Although multiple justifications for punishment exist, most of those
can be classified under the standard categories of desert and
deterrence.63 Desert-oriented theories focus on the offenders moral
culpability and whether it is proper or necessary that society condemn his
actions.64 Deterrence theory, by contrast, is grounded in utilitarian costbenefit analysis, wherein policymakers attempt to dissuade rational
offenders from engaging in harm by manipulating variables such as the
offenders sentence and the probability that he will be detected and
punished.65
Most arguments in support of the sophisticated means enhancement
draw on these rival theories. Thus, the enhancement is warranted because
61. See id. (noting that offense level 12 translates into Zone C offense recommending
10-16 months imprisonment).
62. An offense level of 24 matched with a Criminal History Category I (e.g., a firsttime offender) yields a recommended sentence range 5163 months. At level 26, the range
increases to 6378 months. Thus, the enhancement increases the high-level offenders
recommended sentence by a year. The effect is magnified the greater ones offense level
or criminal history category. See id.
63. See Michael Cahill, Politics and Punishment: Reactions to Markels Political
Rebtributivism, 1 VA. J. CRIM. L. 167, 168 (2012) (As is well known, there are thought to
be two standard so-called theories of punishment, each of which gives a different answer
to the question of when and whom to punish (citing retributive and utilitarian
justifications for punishment)); Paul Robinson, The Ongoing Revolution in Punishment
Theory: Doing Justice as Controlling Crime, 42 ARIZ. ST. L.J. 1089, 1090-91 (2011)
(contrasting rival theories of desert and deterrence).
64. For a discussion of retributive theorys different forms, see Michael Cahill,
Retributive Justice in the Real World, 85 WASH. U. L. REV. 815, 82536 (2007).
65. For several of the most cited accounts, see generally Gary S. Becker, Crime and
Punishment: An Economic Approach, 76 J. POL. ECON. 169 (1968) (setting forth general
concept that criminal deterrence is a function of probability of detection and sanctions);
Kenneth G. Dau-Schmidt, An Economic Analysis of the Criminal Law as a PreferenceShaping Policy, 1990 DUKE L.J. 1, 2 (explaining how criminal laws sanctions can shape
personal preferences).
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sophistication serves as a proxy for low probability of detection and

correspondingly low deterrence or because it evinces a particularly
culpable state of mind and therefore makes the offender more deserving
of harsher punishment. I briefly address each of these below.
1. Sophistication as a Proxy for Probability of Detection
An enhancement for sophistication in either the execution or
concealment of an offense reflects concerns that sophistication reduces the
probability that law enforcement authorities will detect and successfully
prosecute offenders.66 In order to better deter would-be criminals, law
enforcement authorities must match a higher sanction with a lowervisibility offense. This argument is well illustrated by the extraterritorial
and multijurisdictional enhancements that are contained in the same
section as the sophisticated means enhancement.67
Deterrence theory presumes that criminals perceive the expected cost
of punishment as a function of the prescribed sanction and its likelihood
of occurrence.68 Further scholarship recognizes that criminals discount
sanctions slated to begin in later time periods.69 If criminals discount the
gap between engaging in crime and being punished for it, as well as the
additional future months added onto a sanction, sanctions eventually lose
their marginal deterrent effect. The same is true for criminals whose
disutility of imprisonment decreases after an initial period.70 Under any of
these scenarios, extending an already substantial sanction produces less
additional deterrence than increasing the offenders probability of
detection.
66. Similar arguments have been made for imposing punitive damages in cases where
individuals have attempted to conceal their harmful conduct. See A. Mitchell Polinsky &
Steven Shavell, Punitive Damages: An Economic Analysis, 111 HARV . L. R EV. 869, 908
(conceding that courts might use evidence of concealment to aid in the determination of
the chance that the defendant might have escaped liability).
67. See U.S. SENTENCING GUIDELINES MANUAL 2B1.1 cmt. Background (2014).
68. See generally Miriam. H. Baer, Linkage and the Deterrence of Corporate Fraud,
94 VA. L. REV. 1295, 130210 (2008) (reviewing basic theory) [hereinafter Baer,
Deterrence of Corporate Fraud].
69. See, e.g., Yair Listokin, Crime and (with a Lag) Punishment: The Implications of
Discounting for Equitable Sentencing, 44 AM. CRIM. L. REV. 115, 116 (2007).
70. Baer, supra note 68, at 1305 (Discounts affect criminal sentences in two ways.
First, they erode the disutility of additional penalties. Second, they reduce the overall
disutility of sentences meted out after a long delay.). For the technical treatment of
discounts and declining utility of imprisonment, and their collective effect on deterrence
efforts, see A. Mitchell Polinsky & Steven Shavell, On the Disutility and Discounting of
Imprisonment and the Theory of Deterrence, 28 J. LEGAL STUD. 1, 47 (1999). See
generally Steven Shavell, Criminal Law and the Use of Nonmonetary Sanctions as a
Deterrent, 85 COLUM. L. REV. 1232 (1985).
2015]
75
Sometimes, increasing the probability of detection is impossible, as

enforcement budgets reach their limit.71 Accordingly, it might make sense
for the fraud guideline, or the Guidelines in general, to include a provision
that recognizes truly difficult to detect offenses.72 To some degree, the
obstruction of justice adjustment located in Chapter 3 of the Guidelines
performs this function.73 But the obstruction enhancement applies only to
offenders who willfully obstruct or impede the administration of
justice.74 The obstruction enhancement does not apply to fraud offenders
completely unaware of any ongoing law enforcement investigation, much
less to offenders whose conduct has yet to trigger any investigation.75 The
issue arises when offenders purposely construct their frauds in a manner
so that they will be particularly difficult to detect. Prosecutors desiring to
punish these offenders must therefore seek refuge in some other part of the
Guidelines.
Judge Posner articulated the detection justification in United States v.
Kontny, a 2001 tax case in which the Seventh Circuit affirmed the lower
courts application of the sophisticated means enhancement under Section
2T1.1.76 As Judge Posner explained, The more sophisticated the efforts
that an offender employs to conceal his offense, the less likely he is to be
detected, and so he should be given a heavier sentence to maintain the
same expected punishment, and hence the same deterrence . . . .77
Since the Guidelines already presume some degree of concealment
(fraud, after all, depends upon the deception of others), as well as an
adjustment for obstructive conduct,78 a separate enhancement for
sophistication presumes that the offenders conduct was more difficult to
detect than some average fraud crime.79 Thus, were courts to punish
sophistication in a disciplined and fair manner, one would expect them to
set some agreed upon baseline for ordinary fraud and then determine
which cases go beyond that baseline in terms of likelihood of detection. In
theory this sounds plausible; in practice, however, it is made ever more
difficult by the fraud guidelines application to a multitude of economic
71. See generally Samuel W. Buell, The Upside of Overbreadth, 83 N.Y.U. L. REV.
1491, 1510 (2008) (describing factors that affect the governments decision to continue
pursuing offenders).
72. It could also purposely use capacious language to define terms such as fraud. Id.
at 156364 (2008).
73. See U.S. SENTENCING GUIDELINES MANUAL 3C1.1 (2014).
74. Id.
75. See id.
76. United States v. Kontny, 238 F.3d 815 (7th Cir. 2001).
77. Id. at 820.
78. See U.S. SENTENCING GUIDELINES MANUAL 3C1.1 (2014).
79. See Kontny, 238 F.3d at 82021.
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crimes whose similarity begins and ends with an offenders use of deceit.
Surely courts can (and do) compare the case in question to a similar type
of offense (i.e., tax evasion), but the process of choosing a proper baseline
for a multitude of schemes is an invitation for courts to develop wildly
different estimates of how detectible a given crime is and what the relevant
baseline should be.
In Kontny, for example, a husband and wife attempted to conceal their
business income by paying their employees a portion of their salaries off
the books.80 Their methodology was fairly straightforward:
They wrote separate checks to the employees, one for regular wages
and one for overtime, and sometimes the overtime checks would
include reimbursement for expense items to disguise the fact that the
checks were for wages. The Kontnys programmed their computer so
that the amount of the overtime checks was classified in nonwage
expense categories. The stubs for the overtime checks, which they
gave their accountant, likewise placed the expense in nonwage
categories.81
As the foregoing description conveys, the only evidence of
sophistication in Kontny was that the defendants used a computer to help
keep track of their off-the-book payments.82 Judge Posner conceded that
the Kontnys were hardly sophisticated in the lay sense;83 nevertheless,
Judge Posner concluded that their conduct exhibited greater expertise than
the simple shopkeeper who tallies up his receipts for the day and places
some of the cash in a shoebox under his bed in order to evade taxes.84
Thus, in Kontny, the shoebox became the baseline against which all
other tax frauds were judged. Not surprisingly, the defendants argued that
such a baseline would render nearly all federal tax defendants eligible for
the enhancement.85 This argument, however, did not concern the Seventh
Circuit.86 At the time the Guidelines were adopted in 1987, Judge Posner
explained, the cases prosecuted included a mix of simpler tax cases.87
80. Id. at 816.
81. Id. at 820.
82. See id.
83. Id.
84. Id. (The Kontnys efforts at concealment were sophisticated in relation to a case
in which the owner of a shop evades taxes by emptying the drawer of the cash register
before counting the days cash receipts and puts the cash thus skimmed into a shoebox and
slides it under his bed . . . .).
85. Id. at 821.
86. Id.
87. Id. 82122.
2015]
77
Thus, it was reasonable to assume that the Commission intended the courts
to apply the enhancement to the non-simple cases, even if those nonsimple cases expanded to occupy most of the courts docket.88 The fact
that the government had changed its charging practices in the intervening
years did not alter the Commissions definition of sophisticated.89
Whatever the merits of the Seventh Circuits reasoning as applied to
tax cases may be, it is difficult to believe that the Commission would be
satisfied were courts to apply the sophisticated means enhancement across
the board to all or nearly all fraud offenders (or those who choose to use
implements other than the proverbial shoebox). Nor is it likely that the
Commission would set 1987 as the benchmark from which to judge
sophistication. Since the promulgation of the Guidelines in 1987, the
Sentencing Commission has repeatedly revised both the fraud guidelines
core loss table and the various enhancements applicable to specific offense
conduct.90 Accordingly, assuming an equivalent loss amount, the average
fraud of many years ago now triggers a much harsher punishment long
before one takes into account the sophistication of the offense.91
Moreover, to the extent federally charged fraud offenders have indeed
become more sophisticated, it is likely because of technological
improvements in communications and computers. If one adopts as ones
benchmark the simple shopkeeper who hides money underneath his
mattress, then the term sophistication means something akin to uses a
computer or similar technology, which in todays world means very little.
A final point is in order: Although technology greatly enhances a fraud
offenders ability to harm and deceive others, it also exposes the offender
to possible detection. The cash a fraudster hides in his shoeboxes and
mattresses, for example, is far more difficult to detect than a series of
suspicious bank transactions, which are the subject of reporting
obligations under the Bank Secrecy Act.92 The fraud conducted over a
88. See infra note 89.

89. Kontny, 238 F.3d at 822 ([T]oday the average criminal tax fraud that is prosecuted
is more sophisticated than when the concept of sophistication was introduced into the
guidelines. That is no reason for thinking the Commission would consider the enhancement
imposed in this or like cases excessive even if they are the only type of criminal tax fraud
being prosecuted nowadays.).
90. The sentences prescribed by the Guidelines have increased steadily and repeatedly
since 1987 for all classes of economic offenders. Frank O. Bowman III, Sentencing HighLoss Corporate Insider Frauds After Booker, 20 FED. SENTG REP. 167, 168 (2008)
(charting offense level and sentencing range increases for hypothetical offenders)
[hereinafter Bowman, High-Loss Corporate Insider Frauds].
91. Id.
92. The Bank Secrecy Act compels financial institutions to file suspicious activity
reports with the Treasury Departments Financial Crimes Enforcement Network
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smartphone is vastly more traceable and provable than the fraud conducted
over a series of face-to-face conversations.
In sum, digital technology aids criminals, but it also aids victims,
police departments, and government agents. Computers and the Internet
aid prospective victims in avoiding possible scams and enhance the
investigative abilities of police and federal agents. A federal statute
requires telecommunication companies to aid the government in its law
enforcement activities.93 Just how much technology aids offenders or law
enforcement agencies is the subject of a different and far more involved
discussion.94 For now, it is sufficient to point out that technologys effect
on criminals and those who pursue them is likely ambiguous. The
detection justification for the sophisticated means enhancement therefore
takes us only so far.
2. Sophistication as Enhanced Moral Culpability
A distinct reason for sentencing sophisticated offenses more harshly
is that sophistication evinces greater moral culpability than purely
opportunistic, spur-of-the-moment fraud.95 As others have pointed out,
although fraud offenses are often described as specific intent offenses,
the intent to deceive serves as an all-purpose mental state; it covers
everything from the momentary lapse to the well-planned and
(FinCen), and provides criminal and civil penalties for institutions that fail to do so. See
31 U.S.C.A. 5318 (g) (West 2014) (requiring notification).
93. The Communications for Assistance in Law Enforcement Act (CALEA), was
enacted in 1994 and requires telecommunication companies to assist in electronic
surveillance. 47 U.S.C.A. 10011010 (1994). For an in depth discussion of CALEAs
history and the FBIs attempt to expand the Act in light of newer and more sophisticated
technology, see generally Steven M. Bellovin, Matt Blaze, Sandy Clark, & Susan Landau,
Lawful Hacking: Using Existing Vulnerabilities for Wiretapping on the Internet, 12 NW. J.
TECH. & INTELL. PROP. 1 (2014).
94. Professor Orin Kerr has persuasively argued that much of Fourth Amendment
doctrine can be understood as an adjustment tool whereby the Fourth Amendment expands
or contracts to maintain some type of equilibrium in power between criminals and law
enforcement personnel as technological advances aid one or the other group. See Orin S.
Kerr, An Equilibrium-Adjustment Theory of the Fourth Amendment, 125 HARV. L. REV.
476 (2011). As Professor Kerrs article demonstrates, evolving technology has played a
role in aiding both criminals and the law enforcers who pursue them: Change alters how
people try to commit crimes and how the police try to catch them. Id. at 486.
95. For a more in-depth treatment of the difference between planned misconduct and
temptation-driven misbehavior and its implications for the corporate workplace, see
Miriam H. Baer, Confronting the Two Faces of Corporate Fraud, 66 FLA. L. REV. 87, 115
25 (2014) [hereinafter Baer, Confronting the Two Faces of Corporate Fraud].
2015]
79
meticulously executed scheme.96 Notwithstanding federal criminal laws

treatment of momentary lapses and premeditated frauds as equivalents,
most of us intuit a difference between the temptation-driven, impulsive
offender and the diabolical, cold-blooded one. This intuition drives the
statutory distinctions in state homicide statutes between simple
intentional murder and willful and premeditated murder.97 The
intentional killer becomes angry during an argument and kills his victim
with a nearby gun; the premeditated murderer lies in wait and poisons his
prey.98
Federal crimes do not parse mental states or offense conduct the way
state statutes do.99 As Professor Frank Bowman has observed, A peculiar
feature of American property crimes generally and federal fraud crimes in
particular is that, unlike crimes against persons, statutory law does not rank
the severity of offenses according to differences in the mental states of
defendants.100 If there is any parsing to be done, it takes place at the
moment of sentencing. Courts sometimes care whether an intention to
commit fraud was formed in the moment or over a long period of time,101
but federal fraud statutes bundle all purposive conduct into a single
category.
If one of the Guidelines purposes is to distingui[sh] between more
and less culpable defendants,102 then an enhancement that punishes
96. Bowman, supra note 90, at 171 (Neither federal statutes nor the Guidelines rank
mental states as more or less serious or attempt to correlate them with degrees of
punishment.).
97. See generally Michael Zydney Manheimer, Not the Crime but the Cover-Up: A
Deterrence-Based Rationale for the Premeditation-Deliberation Formula, 86 IND. L.J. 879
(2011) (discussing the rationale for creating a distinction between intentional murders with
premeditation and deliberation, and intentional murders without premeditation and
deliberation).
98. None of this is to say that these distinctions hold up well when applied to the
multitude of cases that fall between extreme prototypes. For a critique of the premeditation
doctrine in theory and practice, see Kimberly Kessler Ferzan, Plotting Premeditations
Demise, 75 LAW & CONTEMP. PROBS. 83, 8485 (2012) (articulating normative and
conceptual problems posed by doctrine), and Larry Alexander and Kimberly Ferzan,
Culpable Acts of Risk Creation, 5 OHIO ST. J. CRIM. L. 375, 40001 (2008) (demonstrating
ways in which premeditation doctrine is both under and over-inclusive).
99. As a result, there is no grading of culpability in federal white-collar criminal law:
The classic white collar crimesbank fraud, mail fraud and wire fraudare not
predicated on lower level crimes with a lesser degree of culpability or extenuating
circumstances. The individual is either guilty or not guilty of the designated offense. Ellen
Podgor, The Challenge of White Collar Sentencing, 97 J. CRIM. L. & CRIMINOLOGY 731,
757 (2007).
101. See, e.g., Baer, supra note 95, at 98 n.40 (citing United States v. Adelson, 441 F.
Supp. 2d 506, 513 (S.D.N.Y. 2006)).
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premeditation more harshly is both justifiable and desirable.103 Society can

justly decide to condemn more harshly premeditated actions over those
purposive actions that materialize in a matter of seconds.104 The
concession that premeditation matters, however, still fails to answer
several questions. First, it fails to identify the conduct that demonstrates
premeditation and is therefore deserving of greater punishment. This
difficulty has plagued state courts and legislatures who have labored
mightily to identify language sufficient to distinguish intentional
murders from premeditated ones.105
Beyond the conceptual problem of defining premeditation,
however, is the question of whether sophistication can serve as its proxy.
When it comes to homicide, one can imagine fairly simple planning
(mixing together a relatively common poison, waiting outside someones
home to shoot him, strangling someone in her sleep) that is, nevertheless,
premeditated. The same is likely true in the fraud context. Many of the
factors that courts cite as evidence of sophistication may in fact be
evidence of premeditation. But if that is the case, why are we so sure that
the current loss table does not already reflect such forethought?
B. Three Possible Reasons for the Increase
The previous section offered two possible reasons for punishing
sophistication. Of the two, the moral culpability claim is more
defensible, despite sophistications limitations as a reliable proxy.
With the moral culpability defense in mind, the remainder of this Part
sketches three possible explanations for the rapid increase in the
enhancements popularity: (a) criminals, in general, have become more
sophisticated; (b) federal prosecutors have changed their charging
practices to focus more intently on sophisticated fraud offenses; and (c)
prosecutors, probation officers, and judges have, over time, become more
comfortable seeking and applying the enhancement.
103. Kimberly Kessler Ferzan, Act, Agency and Indifference: The Foundations of
Criminal Responsibility, 10 NEW CRIM. L. REV. 441, 448 (2009) (reviewing VICTOR
TADROS, CRIMINAL RESPONSIBILITY (2005)) (The best understanding of why retributivists
could believe that premeditated killings are more culpable than other intended killings is
that premeditated killings are the absolute expressions of our agency. These are the acts
that the killer not only intends but also plans, coolly and calmly.).
104. The conclusion that the criminal law might not influence the behavior of many
murderers provides no justification for failing to treat with maximum seriousness those
offenders who had an opportunity to reflect upon what they were doing and chose to do it
anyway. Daniel Givelber, The New Law of Murder, 69 IND. L.J. 375, 384 (1994)
(articulating the retributive argument for punishing premeditated killings more harshly).
105. See supra note 98 and accompanying text.
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81
1. Fraud Offenders Have Become More Sophisticated

If fraud offenders have, en masse, become more sophisticated, then
the enhancements increasing prevalence is defensible. It still may not be
desirable, because if all fraud offenders have, over the past decade,
become more dangerous and more morally culpable, the proper response
might be to alter the loss table once again, as the Commission has done
throughout the years.
Whether fraud offenders are more sophisticated than they were ten
years ago is an empirical question meriting its own extended analysis. If
the analysis however, is simply that fraud offenders more often use
technology to carry out their offenses today than before, the argument
fails, particularly under the culpability-based justification for punishing
sophistication. Recall: one of the core justifications for punishing
sophistication is that sophistication serves as a proxy for premeditation106
and therefore demonstrates enhanced moral culpability. Technology
particularly cheap and prevalent technologysevers the connection
between sophistication and premeditation. If one can commit a fraud
through the mere press of a button (or swipe of an iPhone screen), then
fraud very much resembles the temptation-prone, opportunistic behavior
of yesteryear. Accordingly, as technology becomes cheaper and more
available to the masses, the link between sophistication and culpability
weakens, and the enhancement therefore becomes less useful in sorting the
worst offenders from the rest of the pack.
Finally, one might point to the conduct that led to the mortgage
meltdown and corresponding financial crisis107 as evidence of increased
sophistication among those who commit fraud. But few of the individuals
who marketed or created these securities were even charged with fraud,
and even fewer (some would say just one108) were convicted in connection
with such behavior.109 Thus, the sophistication of this uncharged group of
106. See supra Part IV.A.2.
107. See generally Steve Denning, Lest We Forget: Why We Had a Financial Crisis,
FORBES
(Nov.
22,
2011,
11:28
AM),
http://www.forbes.com/sites/stevedenning/2011/11/22/5086/ (giving an overview of why
the 2008 mortgage and financial crisis occurred).
108. See Todd Haugh, The Most Senior Wall Street Official: Evaluating the State of
Financial Crime Prosecutions, 9 VA. LAW & BUS. REV. 153 (2015) (dismissing Kareem
Serageldins prosecution as a mundane white collar crime marginally related to the
financial crisis).
109. For criticisms and responses regarding the governments failure to prosecute Wall
Street executives in connection with the financial crisis, see Hon. Jed S. Rakoff, The
Financial Crisis: Why Have No High-Level Executives Been Prosecuted?, N.Y. REV. OF
BOOKS (Jan. 9, 2014), http://www.nybooks.com/articles/archives/2014/jan/09/financialcrisis-why-no-executive-prosecutions/ (offering reasons why federal prosecutors have
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individuals could not possibly justify the application of the enhancement

to individuals who engaged in far simpler (if easier to prove) behavior.
2. Prosecutors Have Charged More Sophisticated Fraud Offenses
A second explanation for the increased application of the enhancement
is that the population of offenders charged with federal fraud crimes has
changed over the past decade. Under this reasoning, the criminal
population has remained constant while federal prosecutors charge more
sophisticated cases. This explanation more or less maps the governments
argument in the Kontny case.110
As is the case with changes in the overall criminal population, the
federal governments charging practices is a subject that merits its own
extended treatment. Nevertheless, portions of the Sentencing
Commissions data do suggest a shift in the types of fraud cases that
prosecutors charge. Over the past decade, prosecutors have charged fewer
minor fraud cases.111 For example, prosecutions of extremely low-loss
fraud cases ($5,000 loss or less) that were sentenced under Section 2B1.1
have steadily dropped, as demonstrated by Table 2:
focused more on insider trading offenses than possible mortgage fraud claims); Daniel C.
Richman, Corporate Headhunting, 8 HARV . L. & P OLY R EV. 265, 265 (2014) (advising
that a focus on headhunting will only distract from, and reduce the pressure for, efforts to
explain [the collapse] and prevent its occurrence).
110. See supra notes 7689.
111. See infra Table 2.
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83
Table 2: Extremely Low Loss Frauds (Less than $5,000)

Date
2006
2007
2008
2009
2010
2011
2012
2013
Percentage Charged, 2B1.1(b)(1)(A)112

24.8113
23.6
22.0
20.4
19.2
17.5
15.0
14.7
The fact that federal prosecutors offices have substantially reduced

their share of minor fraud cases suggests either an overall preference for
more serious cases, or at least for cases that translate into higher Guideline
offense levels and corresponding prison sentences. Extremely low-loss
frauds do not likely feature much repetition or exist for a long period of
time. Nor do they likely involve much planning or investments in
sophisticated technology to carry out the offense since the payoff in most
cases is so small.
Where the sophisticated means enhancement was reserved solely for
a small subset of especially intricate or complex conduct, the shift away
from extremely low loss frauds would make little difference in the
enhancements prevalence if, in fact, a prosecutor substituted a garden
variety moderate-loss fraud for the very minor one.114 If, however, one
defines sophisticated as encompassing frauds of several years duration;
that use repetitive and coordinated conduct; and employ the use of
computers, forgeries, or fraudulent documents, then the shift from minor
112. Information in Table 2 is taken from the Sentencing Commissions Guidelines
Application Frequencies reports, Use of Guidelines and Specific Offense Characteristics
Guideline Calculation Based Fiscal Year for each fiscal year from 20062013, Use of
Guidelines and Specific Offense Characteristics Guideline Calculation Based Fiscal
Year, U.S. SENTENCING COMMN, http://www.ussc.gov/research-and-publications/federalsentencing-statistics/guideline-application-frequencies (last visited May 25, 2015)
[hereinafter GUIDELINE APPLICATION FREQUENCIES].
113. In 2006, an additional 720 offenders were sentenced under Section 2F1.1; all of
these offenses involved an actual or intended loss in excess of at least $5,000. See id. at
Fiscal
Year
2006,
http://www.ussc.gov/sites/default/files/pdf/research-andpublications/federal-sentencing-statistics/guideline-applicationfrequencies/2006/06_glinexgline.pdf (last visited May 25, 2015). Thus, the combined
group of low-loss frauds sentenced under Section 2B1.1 and 2F1.1 forms a slightly less
percentage of the entire group22.2%.
114. As Professor Bowman points out, between 20032012, the median loss amount for
fraud cases shifted upward from $18,414 to $95,408. Bowman, supra note 59, at 1254.
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frauds to even moderate-loss ones becomes quite significant. Indeed, as

the government shifts its efforts in the direction of moderate and high-loss
frauds, most cases may easily fall under the sophisticated category. The
schemes that fail to garner this appellation may not be conceptually
different from the rest of the pool, but instead enjoy the moral luck of
having been intercepted early enough in the scheme before the offender
has had a chance to engage in repetitive and coordinated conduct.115
3. Sentencing Creep: Getting Used to the Sophisticated Means
Enhancement
The final explanation for the increase in the enhancements incidence
is what one might call sentencing creep. Over time, and in response to
various precedents, the various participants within the federal criminal
justice system have grown comfortable with a broader definition and
application of the enhancement than they may have originally intended.
The change is so incremental and gradual that the players themselves are
unaware of it.116
Sentencing creep entails more than a district courts inadvertent
expansion of sentencing law through vague or ill-considered language.
Rather, the concept describes a phenomenon whereby all of the various
players in the criminal justice system successively transform a so-called
narrowly tailored enhancement into a more broadly applied one through a
series of iterative, incremental moves. Prosecutors seek it in plea
negotiations and at contested sentencing hearings; defense attorneys more
often expect it and perhaps accede to it in some negotiations; probation
officers more often include it in their pre-sentence reports; and finally,
judges more often apply it. Gradually, and over time, a mechanism meant
to sort the worst from the merely bad instead becomes a six to eighteen
month add-on in prison time for nearly everyone.
115. A sentencing regime that sentences on the basis of moral luck hold[s] an actor
responsible for events beyond his control. Darryl K. Brown, Criminal Law Reform and
the Persistence of Strict Liability, 62 DUKE L. J. 285, 338 (2012) (citing state guideline
systems that adjust sentences based on results and circumstances without regard to a
defendants intent or awareness).
116. Donald C. Langevoort, Getting (Too) Comfortable: In-House Lawyers, Enterprise
Risk, and the Financial Crisis, 2012 WIS. L. REV. 495, 511 (2012) (People are fairly adept
at perceiving change when the cues are salient enough, but poor when change is slow and
gradual. This is especially true when we are busy, cognitively engaged (if not overloaded)
in tasks that employ scripts and schemas to make sense of situations that are largely
continuous.).
2015]
85
V. SOLUTIONS TO A POSSIBLE PROBLEM

The sophisticated means enhancement for fraud offenses has steadily
grown in popularity throughout the past decade. It is unclear whether this
growth can be attributed solely to sentencing creep or also to federal
charging practices. The data reflects a drop in extremely minor cases, but
the sophisticated means enhancement ostensibly applies only to
particularly sophisticated offenses. Assuming prosecutors were replacing
extremely minor cases with relatively moderate ones, their actions should
have had little effect on the enhancements prevalence.
Whatever the explanation for the enhancements rise in popularity, it
seems unlikely that this increase will abate any time soon. On April 9,
2015, following hearings and consideration of comments, the Sentencing
Commission adopted its amendment to Section 2B1.1, which included a
narrowing of the sophisticated means enhancement to only those cases in
which the defendants specific conduct was sophisticated.117 Previously,
the enhancement would have applied so long as the offense involved
sophisticated means.118 Now, the prosecution must draw a specific link
between the enhancement and defendants conduct. Perhaps this will
reduce the enhancements popularity because the amendment reduces the
likelihood that a low-level defendant charged in an otherwise sophisticated
conspiracy will be unnecessarily saddled with a two-point enhancement.
Then again, there is no indication that the unsophisticated coconspirator
has been responsible for the enhancements three-fold rise.
More importantly, so long as courts continue to apply the
enhancement expansively to a broad range of conduct, the requirement that
the defendants specific conduct be sophisticated is not likely to derail the
enhancements application. The Sixth Circuits decision in United States
v. Crosgrove119 illuminates the problem. The defendant in a fraudulent
insurance conspiracy appealed the lower courts application of the
enhancement, in part, because he had played no role in the setting up of
fictitious shell entities.120 This fact did not concern the Sixth Circuit in
light of his other sophisticated conduct:
117. Preliminary amendments to the Guidelines, which will become final when
published
in
the
Federal
Register,
are
available
at:
http://www.ussc.gov/sites/default/files/pdf/amendment-process/reader-friendlyamendments/20150409_PRELIM_RF_Amendments.pdf at 65. See also Press Release,
U.S. Sentencing Commission Adopts Economic Crime Guideline Amendments, Apr. 9,
2015, available at http://www.ussc.gov/sites/default/files/pdf/news/press-releases-andnews-advisories/press-releases/20150409_Press_Release.pdf.
118. See U.S. SENTENCING GUIDELINES MANUAL 2B1.1 (b)(10) (2014).
119. 637 F.3d 646 (6th Cir. 2011).
120. Id. at 650.
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[Vol. 61:1
Crosgroves argument that he did not participate in the creation of

shells or otherwise participate in offshore activities is therefore
irrelevant unless he can also refute the finding that the use of a
pseudonym and the issuance of fraudulent insurance certificates is not
an appropriate basis for a sophisticated-means enhancement.121
If the use of a pseudonym and the creation of false certificates in an
insurance fraud scheme trigger the enhancements application, one cannot
help but wonder if the Commissions latest efforts to clarify the
enhancements scope will fall on deaf ears.
Other than the above tweak regarding co-conspirators, the
Commissions amendment did not address the additional concerns raised
in this Essay. The Commission initially proposed tightening the
Application Note to direct courts to compare the present crime to typical
offenses of the same kind, and had further proposed the deletion of the
multi-jurisdictional telemarketing example critiqued earlier in this
Essay.122 The Department of Justice, however, objected to these and other
proposed changes and ultimately, the Commission left the Application
Note and obsolete telemarketing example intact.123Thus, there is no reason
to assume that the enhancements incidence will drop substantially in
future years. To the contrary, assuming courts continue to interpret the
enhancement expansively, it is quite possible that in another decade or so,
the Commission will find itself confronting the same problem it
encountered with MMP enhancements years ago. Assuming that day of
reckoning occurs, how might the Commission respond?
One possibility is to do nothing beyond monitoring the enhancement
more carefully and watching to see if its application crosses some
predefined threshold. Presumably, this monitoring exercise would also
include the sophisticated means enhancement contained in the tax
121. Id. at 667
122. The proposed language would have defined sophisticated means as especially
complex or especially intricate offense conduct that displays a significantly greater level
of planning or employs significantly more advanced methods in executing or concealing
the offense than a typical offense of the same kind. U.S. SENTENCING COMMN, January
2015 Proposed Amendments to Section 2B1.1(b)(10), Application Note 9(B), at 82,
available
at
http://www.ussc.gov/sites/default/files/pdf/amendment-process/readerfriendly-amendments/2015014-RFP-Amendments.pdf (last visited May 25, 2015)
(emphasis added). In addition, the proposed amendment further provided, Conduct that is
common to offenses of the same kind ordinarily does not constitute sophisticated means.
Id.
123. See Letter submitted by Jonathan J. Wroblewsi, Director, Office of Policy and
Legislation,
DEPT.
OF
JUSTICE,
March
9,
2015,
available
at
http://www.ussc.gov/sites/default/files/pdf/amendment-process/public-hearings-andmeetings/20150312/DOJ.pdf.
2015]
87
guideline, Section 2T1.1(b)(2).124 This monitoring approach, although

conservative and unlikely to waste any time or political capital, is
distasteful insofar as one believes the enhancement is no longer doing the
job the Commission intended it to do. Moreover, it raises the question as
to what the threshold ought to be.
A second option is to keep the language in the enhancement intact, but
for the Commission to revise its efforts to change the commentary and
application notes relating to the enhancement. The Commission could, as
it already tried to, update the examples it uses to demonstrate
sophistication. It might also state that the mere use of digital or computer
technologyas well as innovations made readily available by digital
technology, such as altered invoices or forged signaturesdoes not
necessarily signify the sophistication warranting a two-level
enhancement. It could even make clear that conduct less sophisticated than
the conduct described in its application note should not justify an
enhancement. Unfortunately, these half-measures would likely spur more
litigation without necessarily clearing up, for litigants or courts, what the
Commission envisions for this particular enhancement. Moreover, any
movement in this direction would likely invoke strong objections from the
Department of Justice.
The Commissions remaining options are either to revise and retain
some version of the enhancement or eliminate it outright. Elimination
might be the easiest and cleanest move, were it not for Congresss 1998
statutory directive to include such an enhancement.125 Still, that statute
requires only that the Commission provide an appropriate enhancement
for frauds126 that involve sophisticated means.127 Although the
Commissions discretion to interpret that term is not unbounded, it
nevertheless maintains significant latitude to formulate language meeting
Congress statutory directives.128 Were the Commission to eliminate
124. In fiscal year 2013, 14.3% of offenders sentenced under Section 2T1.1 received the
enhancement. See Use of Guidelines and Specific Offense Characteristics Fiscal Year
2013, U.S. SENTENCING COMMN, http://www.ussc.gov/sites/default/files/pdf/researchand-publications/federal-sentencing-statistics/guideline-applicationfrequencies/2013/Use_of_Guidelines_and_Specific_Offense_Characteristics_Guideline_
Calculation_Based_Revised.pdf (last visited May 25, 2015). In 2005, that number was
14.1%. See Use of Guidelines and Specific Offense Characteristics Fiscal Year 2005, U.S.
SENTENCING
COMMN,
http://www.ussc.gov/sites/default/files/pdf/data-andstatistics/federal-sentencing-statistics/guideline-applicationfrequencies/2005/05_glinexgline.pdf (last visited May 25, 2015).
125. See supra note 21.
126. See Telemarketing Fraud Prevention Act of 1998 6(c)(2) (1998).
127. Of course, Congress could repeal or clarify that directive.
128. United States v. Hoyle, 751 F.3d 1167, 1172 (10th Cir. 2014) (citing United States
v. LaBonte, 520 U.S. 751, 757 (1997)).
88
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[Vol. 61:1
Section 2B1.1(b)(10)(C) due to its increasing prevalence, extraterritorial

and multijurisdictional schemes would still continue to receive the twopoint enhancement (as originally intended by Congress),129 as would
obstructive behavior under Section 3C1.1. Concerned sentencing courts
could impose additional upward variances on offenses that featured
particularly troubling facts but fell outside the above categories. But the
garden-variety sophistication that comes about through lying and
planning ones conduct over a period of months or years would no longer
result in a court or prosecutor needlessly tacking on another six to twelve
months imprisonment; the punishment for such sophistication would
already be reflected in the fraud loss table, since planning often begets
greater and more certain loss.
Of course, the Commission could one day significantly overhaul the
economic fraud guideline in its entirety, which some commentators have
strongly urged.130 Assuming it keeps the economic fraud guideline intact,
however, the Commission will likely find itself revisiting this issue. To the
extent sophistication (particularly the term as currently defined) is already
bound up in the calculation of intended or actual loss, the enhancement
does nothing more than extend most moderate and severe fraud offenders
sentences. Even if one could support such an extension as necessary and
desirable, the proper way to increase sentences for any crime is to do so
transparently, following proper deliberation, and not in the ad hoc manner
that sentencing creep suggests.
VI. CONCLUSION
This Essay has focused on a single provision of the all-purpose fraud
guideline, Section 2B1.1. It suggests a reform that is fairly minimal
compared to the far more extensive changes that other organizations have
promoted regarding the sentencing of white-collar offenders.131
129. The Telemarketing Acts directive singled out the perpetration of frauds from
outside the United States as evidence of sophisticated means. See 112 Stat 521, 6(c)(2),
available at http://www.justice.gov/sites/default/files/jmd/legacy/2014/01/15/act-pl105184.pdf (last visited May 25, 2015).
130. The Commission had previously indicated its desire to study and revise the fraud
guideline. See supra note 3. In 2013, it held an Economic Crime Symposium in New York
at John Jay College to solicit feedback from a mix of jurists, practitioners and academics.
For a discussion of the Symposium, as well as more substantial reform proposals, see
Bowman, Dead Law Walking, supra note 59, at 1251 (describing symposium and
Commissions stated interest in possibly revising fraud guideline).
131. For example, the American Bar Associations Task Force has proposed a far more
comprehensive and far-reaching type of reform for the sentencing of white-collar crimes.
See AMERICAN BAR ASSOCIATION CRIMINAL JUSTICE SECTION, A R EPORT ON BEHALF OF
THE AMERICAN B AR ASSOCIATION C RIMINAL J USTICE S ECTION T ASK F ORCE ON THE
2015]
89
Nevertheless, an in-depth analysis of a single enhancement is

instructive; among other things, it demonstrates the difficulty inherent in
sorting economic crime offenders for lesser and greater punishments.
Moreover, it illuminates the instability inherent in criminal sorting
devices. Between a state system whose statutes sort bad and worse
behavior up front, and a federal system that relies in large part on a quasideterminate sentencing scheme, the latter regime should be better
positioned to intervene when sorting devices lose their efficacy, assuming
politics does not get in the way of much needed reform.
Back when the Guidelines were first promulgated, the Commission
added an enhancementmore than minimal planningin an attempt to
distinguish some types of fraud offenses from others.132 By 1998,
observers concluded that this device had become ineffective and the
Commission retired it in 2001.133 Thirteen years later, another sorting
device may be losing its efficacy. Concededly, the sophisticated means
enhancement is still applied in fewer than 12% of all fraud cases, and it
may well be that its increasing popularity will level off. Nevertheless, a
survey of even a few court cases interpreting the enhancement implies that
it has come unmoored from its original meaning. If it was intended for
only the most intricate frauds, it is gradually turning into an enhancement
that will apply to all but the most simplistic. When the Commission again
revisits the question of white-collar sentencing, as it is sure to do, it would
do well to reconsider the costs and benefits of this relatively minor but
vexatious enhancement.
REFORM
OF
F EDERAL
S ENTENCING
FOR
ECONOMIC
CRIME
(2014),
http://www.americanbar.org/content/dam/aba/uncategorized/criminal_justice/economic_c
rimes.authcheckdam.pdf (advocating a number of far-reaching reforms in how economic
crimes are sentenced);
132. See Steer, supra note 18, at 264 (describing Commissions early approach to
economic crimes in 1987, which relied principally on the dollar loss and . . . more than
minimal planning to measure offense seriousness).
133. See supra at Part I and notes 1520.

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UNSOPHISTICATED SENTENCING

WAYNE LAW REVIEW

Although the enhancements effect on sentences is modest, amounting

crimes as a percentage of their overall docket;10 and (c) courts, probation

10. See infra Part IV.B.2.

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addressed fraud and theft offenses respectively, were consolidated into a

GUIDELINES MANUAL 2T1.1(b)(2) app. C (supp. 1998), available at

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especially complex or especially intricate offense conduct,29 it goes on

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offenses.37 Most of those individuals were sentenced under Section 2B1.1;

37. See generally Guideline Application Frequencies, U.S. SENTENCING COMMN,

Table 1: Sophisticated Means from 2005-13

Back in 2005, a tiny fraction of fraud offenders received the two-point

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time,44 that includes the use of pseudonyms, forgeries, or fake invoices,45

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2001.56 Moreover, as MMPs critics pointed out years ago, an

will include a term of imprisonment.61 For high-loss offenders, as well as

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sophistication serves as a proxy for low probability of detection and

Sometimes, increasing the probability of detection is impossible, as

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88. See infra note 89.

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meticulously executed scheme.96 Notwithstanding federal criminal laws

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premeditation more harshly is both justifiable and desirable.103 Society can

1. Fraud Offenders Have Become More Sophisticated

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individuals could not possibly justify the application of the enhancement

Table 2: Extremely Low Loss Frauds (Less than $5,000)

Percentage Charged, 2B1.1(b)(1)(A)112

The fact that federal prosecutors offices have substantially reduced

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frauds to even moderate-loss ones becomes quite significant. Indeed, as

V. SOLUTIONS TO A POSSIBLE PROBLEM

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Crosgroves argument that he did not participate in the creation of

guideline, Section 2T1.1(b)(2).124 This monitoring approach, although

WAYNE LAW REVIEW

Section 2B1.1(b)(10)(C) due to its increasing prevalence, extraterritorial

Nevertheless, an in-depth analysis of a single enhancement is

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